In recent times, changes to pensions – and the Universities Superannuation Scheme (USS) – have been to the fore of national UCU negotiating and local branch activity. USS is the principal pension scheme provided by the University of Bristol and other HE-associated institutions for many of their employees.
Bristol UCU keeps you up-to-date with key updates, information for members and general USS and UCU resources. USS and UCU are now anticipating the 2017 valuation and UCU is continuing to challenge the actuarial valuation methodology.
23 July 2016. If you pay, or wish to pay, money puchase additional voluntary contributions (MPAVCs) into Prudential or the new USS defined contribution section (called the USS Investment Builder) then be sure to read Do you have, or want, a MPAVC? on the 2016 CHANGES tab.
18 February 2016. Pensions and National Insurance hikes to hit academics hard. Extra contributions are likely to cost many university staff more than £1,000 a year. (THES, 18/02/2016).
30 January 2016. Members with AVC contracts will be aware of the significant changes due to come into effect later this year in April. Since AVC agreements are individual contracts between a USS member and the trustee, there may be circumstances in which a member may wish to bring a complaint against the trustee. UCU has prepared guidance on how to do so here.
9 December 2016. Volunteer sought to participate in a joint national USS forum. If you have relevant expertise or know anyone who may be available, please let ucu-office@bristol.ac.uk know. Further details will follow as we get them. See the Valuation Campaign tab.
November 2015. Following its meeting in October, the Branch has written to the Vice-Chancellor asking for the creation of a joint working party to look at valuation methodologies. Letter and motion (PDF, 294Kb).
September 2015. USS have launched their new website, USS for the future, with detailed information and updates about the 2016 changes
July 2015. The USS Trustee has agreed the changes to be made to USS benefits to be introduced from April 2016.
With worrying reports of an estimated future deficit despite recent reforms such as the end of Final Salary, UCU is currently challenging once again how the USS is being valued.
During the recent USS dispute, UCU characterised the USS’s approach to valuation and de-risking as ‘recklessly prudent’ and a number of employing institutions and academic experts expressed significant reservations about the approach of the USS Trustee.
The core objective now is to persuade employers locally to influence their Universities UK representatives nationally that a change in valuation methodology will more accurately reflect the financial state of the scheme – and is right for members, institutions and the scheme itself.
Local developments
At the Branch General Meeting on Wednesday 21 October a Branch Motion and letter to the University (PDF, 294KB)(based on a model motion proposed by national office) was passed and calls on us locally to:
- raise the scheme funding approach at our Joint Negotiating and Consultative Committee, Senate, Council, Faculty, School and Divisional meetings
- write to the University to join with UCU in reviewing the USS funding methodology
- create a joint working group with management, UCU and relevant colleagues to develop a local response to the USS board.
Help sought from University staff
Academic and professional staff with relevant expertise (whether or not they are members of UCU) are warmly invited to join the University Pensions Working Group that we are seeking to set up. We have also been asked to nominate possible representatives on a national USS Joint Forum. If you are interested, or know somebody who might be, please let ucu-office@bristol.ac.uk know.
BACKGROUND INFORMATION AND RESOURCES
More problems for USS ahead?
- USS Pension updated forecast: Gloom and doom (December 2015, Mike Otsuka, LSE).
- USS deficit rises despite savings from the end of final salary pensions (August 2015, THES)
Critiques of the current USS valuation methodology:
- USS is overstating pension liabilities by over £5bn if economists for the Bank of England and USS Central Reserve are more reliable guides to inflation that USS’s actuary (December 2015, Mike Otsuka)
- Challenging the USS approach to scheme funding: A UCU briefing for branches (PDF, 928KB, UCUHE/257)
- How to value a pension fund for an ongoing higher education sector (October 2015, Mike Otsuka). Mike at LSE shares his thoughts in a manner accessible to those unfamiliar with the technicalities of pension scheme valuation.
- Two priorities for a Joint UCU‐UUK challenge to USS’s approach to scheme funding (September 2015, Mike Otsuka)
- Academic experts letter to USS (PDF, 278KB) and their meeting with USS CEO (April 2015)
- What reform directions for USS? (March 2015, Nicholas Barr, LSE) (PDF, 272KB)
General critiques of pension valuation methodologies:
- Pension industry is not taking enough investment risk, say actuaries (October 2015, The
Actuary) - Riders on the storm, (March 2015, The Actuary). A Bank of England study recommends a more long‐term approach to pension fund valuation – and a brief commentary by Mike Otsuka at LSE on
the parallels with the USS valuation.
USS triennial valuation 2014:
The links in this section are largely technical and concern the details of the valuation methodology adopted by USS and commentary on this by Universities UK (UUK) and UCU. Although a few details changed as the result of the consultation, these papers are the most comprehensive overview of the USS case and some of the ways in which it has been criticised by representatives of stakeholders:
- USS actuarial valuations and recovery plan 2014 – the final valuation reports
- USS 2014 actuarial valuation: A consultation on the proposed assumptions for the scheme’s
technical provisions and recovery plan (PDF, 1415KB) - UUK Response to the USS consultation and UUK’s case for reform (PDF, 328KB)
- UCU response to the USS consultation: a critique by the UCU actuaries, First Actuarial (PDF, 1088KB)
Members will be aware of the impending changes to USS pensions, in particular: the end of Final Salary accrual from1 April 2016; replaced by Career Revalued Benefits (CRB) for all members; and a new Defined Contribution (DC) section to USS.
Details of the changes are available on a new USS website called USS for the future.
The changes will be introduced in two phases:
• 1 April 2016: the existing final salary pension arrangements will come to an end and all members will move into a revised career revalued benefits (CRB) section. Both employer and member contributions will increase from this date.
• 1 October 2016: the new defined contribution (DC) section will be introduced
These are complex and significant changes and it is very important that members are attentive to announcements and meet deadlines that may affect you. Our Pension team has prepared a summary of key points and dates to bear in mind, in particular regarding AVCs and Transfers-In.
Do you have, or want, a MPAVC?
Currently, defined contribution (DC) money purchase additional voluntary contributions (MPAVCs) are administered on behalf of USS by Prudential.
The Prudential MPAVC arrangement will close from 30 September 2016 (except as described below) and it will be replaced by the new DC section of USS, called the USS Investment Builder.
If you wish to pay DC AVCs from your October pay, you will need to register online by the end of July at www.uss.co.uk/myuss. There you can opt to pay an additional 1% of your salary into USS and receive a 1% matched contribution from the University. You can also elect to pay more than 1% (although it won’t be matched) and you can choose and manage your investment funds online.
Contributions to Prudential will cease from September and funds already built up will be transferred over to USS during 2017, with just two exceptions:
- If you have invested in the Prudential With-Profits fund, you may be eligible to continue paying contributions into that fund (but not into Prudential’s other unit trust funds). You can check which funds you have by logging in to https://www.pruretire.co.uk/.
- If you currently pay life assurance premiums as part of your MPAVC arrangement, these will continue unless you decide otherwise.
USS should have written to you in June if these exceptions apply to you. If you are in any doubt you should carefully read this factsheet (PDF, 155 Kb).
Remember, full details and timelines of all changes to USS can be found at USS for the future.
Important note on USS additional voluntary contributions (AVCs)
Members with AVC contracts will be aware of the significant changes due to come into effect later this year in April. Since AVC agreements are individual contracts between a USS member and the trustee, there may be circumstances in which a member may wish to bring a complaint against the trustee. UCU has prepared guidance on how to do so here.
Further information
- USS for the future (definitive up-to-date information about the USS changes)
- University of Bristol ‘pensions latest’
- Key dates for transfers-in and AVCs
USS web site has information about:
- USS for the future – information and updates about the 2016 pension changes, including a new benefits illustrator
- Final Salary section (current), including benefit modellers and calculators
- Career Revalued Benefits (CRB) section (current), including benefit modellers and calculators
UCU web site has information about:
- What’s happening to your State Pension? – UCU’s information on changes to State Pension ages and benefits.
Changes to National Insurance, State Pension and Second State Pension
The Government has announced changes to the State Pension and Second State Pension from April 2016:
From April 2016, members will pay more national insurance as, like other schemes, USS will lose its “contracting-out” status leading to members paying 1.4% more National Insurance on earnings between £5,500 and £40,000.